Back in 1982, seven people died after taking Tylenol that had been poisoned with cyanide. Parent company Johnson & Johnson's speedy response and skillful handling of the subsequent scare would become the standard for successful corporate crisis management. Almost 30 years later, Johnson & Johnson and its subsidiary, McNeil Consumer Healthcare, are facing a new Tylenol recall crisis that has once again led to questions about the overall safety and quality of its medications.
In May, Johnson & Johnson announced a voluntary recall of more than 40 varieties of children's and infants' liquid Tylenol, Motrin, Zyrtec and Benadryl cold medicines after an FDA inspection at a McNeil manufacturing plant in Fort Washington, Pennsylvania found 20 different violations, including raw materials contaminated with bacteria, equipment covered in thick dust, repairs made with duct tape, holes in the ceiling, and poor safety and quality controls. The FDA also revealed that since June 2009, McNeil had received 46 consumer complaints of "black or dark specks" in certain medications but had so far neglected to investigate the cause. While the FDA did say that the chance of serious harm from using the products was "remote," it did caution consumers to stop using them and seek out safer generic alternatives. To date, no injuries have been reported.
McNeil has since halted production at the facility until the issues can be corrected. The company also released a statement apologizing for "the concern and inconvenience this recall may have caused" and characterizing quality control failures as "unacceptable." McNeil also began a "comprehensive assessment of quality and manufacturing systems" across its operations.
Johnson & Johnson and McNeil's quick response to this latest recall serves as a sharp contrast to Toyota's tepid reaction to its recall problems earlier in the year, but the company may not be out of the woods yet. This is the third recall of Tylenol products in less than a year. In January, Tylenol recalled 50 products when customers began to complain about moldy-smelling bottles and nausea, stomach pain, vomiting and diarrhea after using the medications. The cause was traced to contamination from a chemical used in packaging. Before that, in September 2009, McNeil recalled 21 Tylenol products because of possible bacterial contamination of an inactive ingredient.
This string of recent quality issues has caught the attention of lawmakers, who have decided to open an investigation into McNeil's safety practices. Congressmen Ed Towns (D-NY) and Darrell Issa (R-CA) of the House Committee on Oversight and Government Reform (the same group that spearheaded the Toyota investigations) have promised hearings on the issue, citing conflicting reports from the FDA and McNeil.
"We are deeply concerned about the recall of popular pediatric medications widely used by infants and children across the country," said Towns and Issa in a statement. "When a recall of this nature occurs, it is our responsibility to bring attention to the issue as a public service and to fulfill our oversight responsibility by asking tough questions about the conditions of the manufacturing plant and controls put in place by the drug company's management, and about whether FDA's inspection and recall procedures were sufficient."
While Johnson & Johnson expects its second quarter earnings to be hurt by the recall, it is the prospect of congressional hearings that could be more worrisome from a reputational standpoint. If a deeper investigation reveals additional problems, leading to more recalls (or, even worse, if children get sick from Tylenol products), it may be one hurdle too many for Johnson & Johnson's vaunted crisis management skills to overcome.
Tylenol’s Headache
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